The process of dissolving your limited partnership depends on the dissolution provisions of your partnership agreement and the partnership laws in the state where you registered the business. Your partnership agreement can set certain dissolution rules, such as establishing a voting procedure that governs the decision to dissolve the partnership. However, you must also complete the steps outlined in the dissolution section of the state partnership statute to avoid liability.

Step 1

Call a meeting of the partners. Follow the meeting notice procedures required by the partnership agreement. The typical partnership agreement requires at least 30 days notice in writing of a partner meeting. Some agreements require the notice to include the agenda for the meeting.

Step 2

Vote to dissolve the partnership. Most state partnership statutes require all of the general partners and a majority of the limited partners in limited partnership to agree to dissolve the partnership, unless the general partnership agreement establishes a predetermined date for dissolution. Record the vote in the meeting minutes, and file the minutes with the partnership records.

Step 3

Appoint one or more general partners to wind up the partnership's business. Most states let the partners hire an outside agency to handle winding up business affairs, if they choose. If no general partners are available, the LP can ask the court to supervise liquidation or use a liquidation trustee.

Step 4

File a certificate of cancellation with the state business registrar. This certificate is filed with the same state office where you filed the partnership's certificate of limited partnership. The certificate of cancellation typically requires basic information, such as the name of the partnership, the date the certificate of limited partnership was filed, and the effective date of cancellation. Most states let you download a form to prepare the certificate from the secretary of state's website or the comparable state agency that handles business registrations. Include the appropriate fee with the filing.

Step 5

Settle all of the partnership's outstanding obligations, including tax bills if the partnership owes state sales or employment taxes. Pay all existing creditors and set aside money to cover any contingent liabilities, such as ongoing payment disputes that might not be resolved in the partnership's favor. This typically requires the partner in charge of dissolution to liquidate the LP's assets.

Step 6

Repay the partners' capital contributions out of any remaining assets. Each partner should be given back the money he put into the partnership, to the extent that there are assets left over after satisfying all of the LP's outstanding obligations. If the remaining assets cannot cover all of the partners' contributions, distribute the available money proportionally.

Step 7

Distribute any remaining LP assets to the partners in proportion to each partner's ownership interest.

Step 8

Close all partnership accounts, cancel all business registrations and notify clients, customers and vendors of the dissolution of the business.

Step 9

Complete final tax forms for the LP, and distribute final K-1s to partners.

About the Author

Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995. Her online articles specialize in legal, business and finance topics. She holds a Juris Doctor and a Bachelor of Science in business administration with a minor in finance.